Move Over RBI, Banks on Their Own Now Ban Exchange for 1 Day

Neither the country’s central bank, nor the government could stop the banks from choosing their own course of action in the midst of currency crisis being faced in the country. On their own volition, banks under Indian Banks’ Association on Friday said that all banks will serve only their own customers for one day and will not exchange the old Rs 500 and Rs 1,000 notes. Exception is only senior citizens, they added.

While the RBI is assuring the public that there will be a steady stream of exchange service, the banks have announced unilaterally that they will not continue exchanging notes as their other banking services were badly hit in the last 10 days financial contingency in the country.

The Secretary, Department of Economic Affairs, Shri Shaktikanta Das addressing the press conference, in New Delhi on November 17, 2016.

The decision followed Finance Minister’s defence in his address to the Indian Economic Forum in the evening that the reducing number of queues would return banks to normalcy in the next one week or two.

While RBI and the Finance Ministry remained silent, IBA said, “All these days our own customers have suffered because we have not been able to do their work. So, we have seen lot of pending work at branches especially for our existing customers. We, from IBA, have taken a view that tomorrow, that is, on Saturday, we shall be exclusively doing work for our own customers. And tomorrow we will not be doing exchange of notes (for outside customers),” IBA chairman Rajeev Rishi said.

He, however, said from Monday onwards all customers will be allowed to exchange notes. Referring to using indelible ink marks on index fingers of those exchanging notes, Rajiv said the queues have come down by 40% as it effectively stopped repeat money exchangers thronging banks with invalid currency notes.

The finance ministry said using other persons’ bank accounts to convert black money, if established, would attract tax, interest and 200 per cent penalty. But little did the number of queues come down anywhere as TV channels are continuously showing the national trauma.

The flip-flop over exchange of notes has weaned away the initial support to the government move to banish black money. First the exchange was allowed for Rs.4000 and then increased to Rs.4500 and the next day it was reverted to Rs.2000 and now denial of exchange service altogether.

Social media is going buzz over allegations and counter-allegations of the amateur attitude being shown by the government on banking services in the country. The serpantine queues in front of every ATM and bank shows the inefficient implementation of a good decision by the government.

Prime Minister Narendra Modi on November 8 announced demonetisation but the ATMs lacked recalibration that is so far done for 10% of the country’s ATMs. Now that banks have refused exchange services on Saturday and remain closed on Sunday, it would begin the next week again with huge queues upsetting the process.